apan's export growth slowed for a fifth month in July, adding to risks in an economy already under threat by the yen's surge to a 15-year high against the US dollar.
Overseas shipments advanced 23.5 per cent in July from a year earlier, less than June's 27.7 per cent, the Finance Ministry said today in Tokyo. The median estimate of 18 economists surveyed by Bloomberg was for 21.8 per cent. From a month earlier, exports fell 1.4 per cent.
Today's report underscores that Japan's export-fueled rebound is losing steam after gross domestic product grew at the slowest pace this year in the second quarter. The yen's advance is also threatening earnings of companies from Toyota Motor to Sony., putting pressure on policy makers to curb the currency's 10 per cent appreciation this year against the US dollar.
''We look for a gradual slowdown in export growth ahead as exports to Asia appear to have peaked,'' Takehiro Sato, chief Japan economist at Morgan Stanley MUFG Securities in Tokyo, said before the report. An economic slowdown in Europe and the yen are also risks, he said.
The yen traded at 84.19 per US dollar at 9 a.m. in Tokyo from 84.23 before the report. It reached 83.60 yesterday, the highest since 1995. The Nikkei 225 Stock Average opened 1 per cent lower, after tumbling to its lowest close since May 2009 yesterday.
Japan's currency has climbed against all of its 16 major counterparts in the past month as concern about the global recovery boosted demand for the currency as a refuge.
Policy makers have failed to formulate a response to the market volatility, with Prime Minister Naoto Kan only asking ministers to come up with fresh proposals to support the economy after an August 16 report showed growth slowed to an annualized 0.4 per cent in the April to June period, the weakest pace in three quarters. He spoke to Bank of Japan Governor Masaaki Shirakawa this week, without discussing intervention in currency markets, which Japan has refrained from doing for six years.
''The root cause of currency strength in Japan is deflation,'' said Jesper Koll, Tokyo-based head of equity research at JPMorgan Chase & Co. ''Clearly there is no one magic bullet, but it needs to be a concerted and coordinated policy effort between fiscal authorities, regulatory authorities as well as monetary authorities.''
One-sided moves
Finance Minister Yoshihiko Noda said yesterday that recent currency movements have ''clearly'' been one-sided, and his remarks failed to stem the gains. The Bank of Japan is considering further monetary easing, the Nikkei newspaper said today, without citing anyone.
Every one-yen gain in the Japanese currency against the dollar reduces Toyota's annual operating profit by 30 billion yen, according to the world's biggest carmaker. Sony, which generates more than 70 per cent of revenue outside of Japan, says it loses about 2 billion yen of annual operating profit for each yen gain against the US currency.
Slower expansions in China and the US, Japan's biggest markets, may also be a drag on the recovery. Manufacturing growth in the two countries has been cooling, pointing to softer export demand, analyst Naoki Iizuka said.
The manufacturing figures ''suggest that the pace of Japanese export growth is likely to slow in the months ahead,'' said Iizuka, a senior economist at Mizuho Securities Co. in Tokyo. ''We expect the slowdown in Japanese export growth to be clearly visible'' in the fourth quarter, he said.
http://www.smh.com.au/business/world-business/japans-export-growth-slow-on-waning-global-demand-20100825-13r3q.html
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